National Clearance Rate Drops to 58.4%
Australia's auction clearance rates have slumped to a six-year low, with preliminary figures from CoreLogic revealing that only 58.4% of properties sold at auction last week. This represents the weakest result since December 2019, when clearance rates dipped below 60% during a previous market downturn.
The data, covering auctions held across the country's capital cities, shows a sharp decline from the same period last year when clearance rates were above 70%. The weakening market has been attributed to rising interest rates, tighter lending conditions, and affordability constraints.
Sydney and Melbourne Lead the Decline
Sydney, Australia's largest auction market, recorded a clearance rate of just 56.2%, down from 68.4% a year ago. Melbourne fared slightly better at 59.1%, but still well below the 72.3% recorded in the same week last year. Both cities have experienced significant price corrections over the past 12 months.
"The auction market is clearly feeling the pinch from higher borrowing costs and reduced buyer confidence," said Tim Lawless, research director at CoreLogic. "We're seeing a growing mismatch between vendor expectations and what buyers are willing to pay."
Volume of Auctions Remains High
Despite the lower clearance rates, the number of properties taken to auction remains elevated. A total of 2,345 homes were auctioned across the capital cities last week, compared to 2,108 in the same week last year. This suggests vendors are still keen to sell, but buyers are becoming more selective.
The increased supply has given buyers more options and bargaining power, leading to more properties being passed in or withdrawn from auction. In Sydney, 42% of properties were passed in, while in Melbourne the figure was 38%.
Impact on Housing Market Outlook
The weakening auction results are likely to put further downward pressure on home prices, which have already fallen in many parts of the country. CoreLogic's home value index shows national dwelling values dropped by 1.2% in May, with Sydney and Melbourne leading the declines.
Economists expect the Reserve Bank of Australia to raise interest rates further in the coming months, which could exacerbate the slowdown. "The combination of rising rates, high inflation, and tight lending standards is creating a perfect storm for the housing market," said Lawless.
However, some analysts note that the market is not in freefall, as employment remains strong and migration is picking up. The coming months will be critical in determining whether the downturn deepens or stabilises.
